While airlines are suffering from significant falls in passenger numbers and the rise in average fleet values underwriters will be seeking to arrest the slide in rates following a year where they have been a number of major losses.

It all points to a difficult renewal for many according to broker Aon which has issued its Airline Market Indicators for 2009/10.

It concludes the challenging economic conditions are forcing airlines to be realistic about their expected level of growth during their 2009/10 insurance policies, with average fleet values (AFV) only expected to rise by 1% while passenger numbers are set to decline by 9%.

The gloomy figures are in stark contrast to the numbers reported in recent years. For the same period in 2008, AFV was expected to rise by 11% and passenger numbers by 13%. Similar exposure growth was forecast in 2007, 2006 and 2005.

It means that the insurance industry and the aviation sector will have some tough talking in the months to come according to Magnus Allan, Aon Global UK Aviation & Aerospace analyst.

"Even before many of the premium airlines renew in the final quarter, passenger number forecasts are expected to decline by nearly 10% overall for the industry,” he explained. “While some of the industry data is starting to look more positive, given the well documented decline in the number of business travellers, passenger number forecasts could be even more gloomy by the end of the year once more of the industry's major players have placed their 2009/10 insurance programmes.

"The tension between the insurance markets needing to increase premiums and an industry that is suffering from the effects of the global economic downturn continues."